Denial of Maintenance and Cure Results in Large Punitive Damage Award

In 2009, the U.S. Supreme Court sent shock waves through the maritime industry and legal community when it ruled that a Jones Act employer could be liable for punitive damages for the wrongful denial of maintenance and cure benefits. Maintenance and cure, which are similar to land based employees’ worker’s compensation benefits, are owed to seamen who become injured or ill while in the service of the vessel, irrespective of fault. In the case of Atlantic Sounding Co. Inc. v. Townsend, the Supreme Court ruled that punitive damages could be awarded upon a showing that an employer “arbitrarily and capriciously” failed to provide the injured or ill seaman with such benefits.

Since that 2009 ruling, a handful of district courts have awarded punitive damages for the non-payment of maintenance and cure. But a recent case from the Washington State Supreme Court has gotten the attention of maritime employers and admiralty attorneys. The case of Clausen v. Icicle Seafoods has garnered significant attention not so much for following the trend of granting a punitive damage awards, but for the amount of punitive damages given. Although the damages for the maintenance and cure that was owed was only $37,000.00, the Court awarded punitive damages of $1.3 million dollars for the employer’s failure to pay it. This was on top of other general damages of more than $450,000 and an award of attorney’s fees and costs of $428,000.00 that the seaman incurred in fighting for his benefits.

The Clausen v. Icicle Seafoods case is most significant in that it declined to follow the formula enunciated by the Supreme Court in the Exxon Valdez case, which suggested that punitive damages be measured at a ratio of 1 to 1 against compensatory damages. The Clausen court upheld a punitive damage award that was well more than double the compensatory damages. Thus, this case highlights the judiciary’s ability to harshly penalize Jones Act employers who inexcusably fail to meet their maintenance and cure obligations. While offering no firm guidelines for determining the amount of a punitive damage award, the Clausen court emphasized that the measure of damages should be reflective of the nature of the offending party’s misconduct.

Special Note: This artice was originally written for, and published in, the June 2012 edition of WorkBoat magazine. The article also appears on WorkBoat‘s website, www.workboat.com.

Dan Hoerner is a Member at Mouledoux, Bland, Legrand & Brackett. He practices in the areas of Admiralty and Maritime Law, as well as General Casulaty and Insurance Defense. Dan can be contacted at (504) 595-3000 or by e-mail at dhoerner@mblb.com.